 | Issue: | Asia-Pacific III 2012 |
| Article no.: | 3 | |
| Topic: | The changing face of charging and billing | |
| Author: | Morten Brøgger | |
| Title: | CEO | |
| Organisation: | MACH | |
| PDF size: | 289KB |
About author
Morten Brøgger was appointed Chief Executive Officer of MACH on 1st April 2011. Prior to this, he was Chief Commercial Officer, responsible for the company’s global account management and marketing operations, including product marketing and marketing communications. Morten originally joined the organisation as Chief Operating Officer in November 2006 with global responsibility for client support, product management, marketing and pre-sales.
Prior to joining MACH, Morten held the position of Chief Operating Officer of the Fixnet division at Sunrise in Switzerland. In this role, he was responsible for all sales, marketing and product management activities for the Fixnet division, as well as for Sunrise’s entire enterprise sales organisation. Before this, he was Senior Vice President at TDC Business responsible for all product management and marketing activities. Previously, he held the position of VP, Sales at the Scandinavian systems integrator Merkantildata.
Morten has an MSE in International Marketing Management from the Aarhus Business School. He also completed a four month MBA program at the University of California, Los Angeles (UCLA).
Article abstract
The region’s impressive growth of superphones and multi-device users is set to continue, far outstripping Europe and North America. Traditional billing models is simply untenable and cannot cope with the range of new business models, with true real-time spending control and with the unprecedented volumes of events to monitor. Complex pricing structures and fear of bill-shock remain the main barriers to mobile data uptake, and differential pricing by speed instead of megabytes is just as incomprehensible to customers. What is needed is micro-segmentation, based on enhanced analytics, that allows, for example, roaming subscribers to select special tariff for a favourite social media service – i.e. service aware charging.
Full Article
The smartphone revolution has fundamentally changed consumer behaviour. Just a few years ago, a top of the range smartphone was one that offered integrated email. In today’s age of the superphone, high speed internet, a multitude of apps and video streaming capabilities come as standard. In this fast-moving, customer centric landscape, the onus is on operators to produce top of the range customer services. Mobile users now expect to be charged only for the services they use in a consumer friendly and transparent manner and in real-time. Transparent pricing options have become critical to a new generation of savvy consumers who expect to pay for exactly what they consume and nothing more. Additionally, the ability to offer flexibility in price plans and tariffs dependent on consumption patterns, location or user preference, and even on different network connectivity options (3G, LTE, WiFI), has become paramount.
People in all corners of the world have taken to owning multiple devices that would be categorised as mobile connections — mobile phones, tablets, connected notebooks and more — but the GSMA points to the Asia Pacific region as the driving force behind this explosive growth. According to their recent Asia Pacific Mobile Observatory 2011 report, the APAC region accounts for nearly half of all mobile connections globally. “Asia Pacific is one of the world’s fastest-growing mobile markets, through an impressive combination of investment and innovation”, GSMA Chief Government and Regulatory Affairs Officer Tom Phillips stated. “China alone currently has 940 million total mobile connections, exceeding the total number of connections in Europe and the US combined” . The Asia Pacific region will also have the highest roaming revenue growth rate in the coming years, according to Informa Telecoms & Media. The region’s total data roaming revenue (including SMS) is expected to grow at a CAGR of 19% between 2010 and 2015 .
Figures from the GSMA and Machina Research support this and demonstrate that the growth of connected devices is booming in Asia Pacific. The region is expected to be the biggest market by 2020 with total over 11 billion connected devices, and within that, almost 5.6 billion mobile connected devices, accounting for a 47 per cent market share and far outstripping Europe (19.1 per cent) and North America (9.4 per cent).
This shift within the mobile industry makes traditional billing models and systems untenable. Now, more than ever, operators are under pressure to develop online charging systems with more features, more flexibility, more scalability and faster response times. Providing such services is not a simple or quick task, and significant investment is needed to ensure the billing system is able to fulfil its purpose. New developments in terms of customer experience management, online charging and policy control mitigate against traditional billing system models.
Consumer satisfaction
Central to changing how operators launch and charge for services, while enabling the level of differentiation that modern consumers require, is the idea of more consumer empowerment providing the end-customer with the flexibility to tailor services as his/her needs change. Providing a compelling service offering, enabling mobile data services regardless of location, subscription type, device or access type, combined with flexible pricing plan options, is the catalyst that can drive above average growth in usage and revenue as well as reduce subscriber churn rates. Informa research, published in 2011 , provides insights into expected MNO priorities during 2012. The most significant of these insights will be finding ways to enhance the end-user experience. This is the major focus for MNOs in every region. MNOs need to be able to understand their customers’ requirements and usage patterns, and respond with innovative and simplified service plans.
Mobile data – growth for operators?
We have witnessed unprecedented mobile data usage growth in recent years, fuelled by smartphone and tablet device deployments and a greater variety of feature-rich content available for such devices. Helped by new handset launches, high profile mobile applications and a shift in usage, MNOs have been successful in the push to encourage data usage on their networks.
While this trend is encouraging, the results have not been without unintended side-effects – the current overburdening of networks being the most notable example. In addition, increased usage does not necessarily deliver linear revenue growth for MNOs. Cost, along with associated complex pricing structures, remains a significant barrier to the uptake of mobile data services. Subscribers continue to find ways to access data services outside of the MNO’s network environment, resulting in reduced revenue potential.
Monetization of mobile data
The effective monetization of data services must be addressed. Originally, MNOs opted for simple mobile data pricing strategies to encourage take-up of data services, resulting in fixed-rate or flat-rate tariff plans. However, the combination of innovative mobile apps, new pricing expectations and the lower price points of feature-rich smartphones have combined to change user behaviour irreversibly. Flat-rate data tariffs have led to increasing network congestion, while the cost of service provisioning has become disassociated from accurate revenue models. Additionally, there has been a loss of control over the end user relationship, which is increasingly being forged at the application or handset level. The challenges in adapting to evolving user behaviour are also different between domestic and roaming markets, yet there is a need to maintain consistency in the user experience, regardless of issues such as network discovery or CAMEL3 support.
The ‘all-you-can-eat’ model for data consumption is unsustainable and operators will inevitably move towards tiered pricing. While new tariff structures based on measures of speed, rather than volume are being introduced, from a customer perspective this merely replaces one quite arbitrary basis for charging with another one. A tariff approach that aligns tariff with the type of service being provided would provide more transparency for a customer. Operators are also increasingly turning to offload technologies such as Wi-Fi and small cells to prevent overloading of their network capacity. The challenge for operators offloading traffic onto Wi-Fi, is how to deliver seamless handover as well as maintain control and monitor subscriber usage off-net in the same way they do for on-net data traffic.
In a roaming situation, the challenge in monetizing mobile data is further complicated, with concerns about ‘Bill Shock’ preventing many users from switching on data services, when they are roaming. MACHs’ own research indicates that an additional US$900 million global market could be created in mobile data roaming, by simply removing the fear of bill-shock.
If data roaming is to be a success, MNOs not only need to reduce their costs, but also achieve a more granular view of subscriber roaming behaviour. More granular business intelligence techniques are required, as the market is adapting to micro-segmentation and targeted tariff strategies. Such micro-segmentation could be as granular as supporting tariffs that allow roaming subscribers to select specific data rates on particular social network sites that they use more intensively than others.
A further evolution lies in providing end users with greater visibility and control of the amount of data they are consuming. By introducing a pre-paid for post-paid (pay-as- you-go) approach to roaming, cost management can effectively be carried out by the subscriber via self-care applications, allowing them to self-provision services, monitor data usage, receive advice of charge notifications and use multiple payment options for re-charge.
Online subscriber communication extends in other ways. One obvious opportunity to encourage mobile data usage lies with alleviating bill shock via the provision of alerts when a certain data threshold is reached. Such approaches are designed to enhance consumer confidence that the risk of bill shock has been removed – in this way subscribers are kept abreast of how much they are spending almost as they spend it in near real-time.
Continuing progression and meeting customer demands
Customer experience innovation in terms of support for application-based and duration based ‘data packages’, user defined spend limits, and advanced self-care facilities can be integrated into a common service offering. It is important that service packs encompass flexibility and also provide an environment that offers ease of use and familiarity to the subscriber. For example, if a subscriber wishes to use a 24 hour ‘Email Pack’, then it is important to define exactly what that pack gives them, when it expires and also to provide pricing transparency, to encourage usage.
Service pack innovation delivers part of the equation but can be used in conjunction with other elements to help stimulate mobile data usage. One such area is the need for non-arbitrary policy control, allowing users to define custom policy controls to suit their requirements, obviously within broader limits defined by the MNO. In the case of enterprise users, this might be a set of policies defined by the telecoms manager of an enterprise in agreement with the MNOs’ enterprise sales team.
The idea of user-defined policies is related to the need for self-service capabilities, an important element to help put the customer in charge of their own services, as well as helping them to reduce operator costs. Self-care capabilities are also opportunities for the MNO to engage in interactive subscriber marketing, with real-time, personalised, targeted promotions for which accurate and timely information about individual subscribers is vital.
In conclusion
Requirements for the continued evolution of next-generation charging models comprise a range of elements, including an increasing use of online charging to ensure real-time control of spend, combined with real-time policy to monitor volume and type of usage and ensure bill-shock prevention. Online charging and real-time policy management can be combined with the application of service aware charging, to set pricing based on a particular type of service or type of content. To enhance the customer experience the provision of seamless handover between on-net and off-net (Wi-Fi) activity ensures no service discontinuity and should also enhance the potential for revenue share options between MNOs and Wi-Fi service providers (WISPs).
MNOs need to evolve their revenue management infrastructure to support increasing complexity in an increasingly real-time environment. This calls for new features, more flexibility, and lower response times, all delivered in a highly scalable charging and billing environment. From a customer perspective the need is for ease of use, consistency of experience and pricing transparency. Such requirements render traditional billing models and the systems that support them untenable. The time has come for the charging models of old to evolve and adapt to the changing face of the mobile telecommunications industry.
